CSK shares fall by 30% in grey market after news of IPL Suspension

CSK shares fall by 30% in grey market after news of IPL Suspension
CSK shares fall by 30% in grey market after news of IPL Suspension

IPL 2021 suspended: CSK shares fall by 30% in grey market: A fresh surge in COVID-19 cases amid COVID-19 induced the second wave led to the IPL 2021 suspension earlier this week. Numerous players, support staff across four IPL franchises (CSK, KKR, DC and SRH) tested positive for coronavirus. Chennai Super Kings, in particular, witnessed COVID-19 positive cases with bowling coach L Balaji and batting coach Michael Hussey and a bus driver testing positive for the virus.

CSK shares fall by 30% in grey market after news of IPL Suspension: The development led to huge fall for CSK’s unlisted shares. The shares of Dhoni’s team fell sharply by 30 per cent. According to Economic Times, the listed scrap was available at 60-62 in off-market trade on Tuesday from Rs 82-85 in mid-April, when the IPL 2021 kicked off in India.

The unlisted stock has a market cap of Rs 2500 crore.

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IPL 2021 suspended: Chennai Super Kings shares in unlisted market dip by 30 per cent

The decision was not surprising, feels Sandeep Goinka, CEO of Altius Investech, a Kolkata based firm.

“When the nation is facing the wrath of a lethal pandemic, sports and entertainment take a back seat,” he told Economic Times.

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“However, it is a short-term impact, as the tournament was halted only for some time. It is likely to resume in the near future once things come under control. The fundamentals are still sound and intact,” he added.

The downward trend in numbers were coupled with empty stands and low merchandise sales.

“A pause or suspension of IPL will impact their revenues further from advertisers and associated brands,” said Rajesh Singla, Founder of pre-IPO consultancy firm Planify.

“The good part is that such tournaments are usually insured. Last year they had insurance coverage for disruption, but we are not sure if the current situation or voluntary suspension is covered under the claims,” ET quoted him as saying.

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IPL 2021 suspended: Big blow to CSK, unlisted shares dip by 30 per cent

Last month, research firm Duff & Phelps had lowered the brand value of CSK after COVID-19 pandemic ravaged the country since 2019. Adding to it, CSK’s brand value slumped by 16.5 per cent to Rs 611 crore in IPL last year.

The shares had witnessed a huge rise in last two years where it rallied by up to 400 per cent between 2018 and 2020 to trade at Rs 48-50 from Rs 12-15.

Life Insurance Corporation of India (LIC) holds 6.04 per cent stake in the company while Ace investor Radhakishan Damani held 2.39 per cent or 73,69,263 shares in the company till the last quarter of FY 2018.

It is notable that CSK is the only sports team in the country whose shares are available for public investment, which attracts interest due to previous performances.

In terms of IPL performance, CSK won 5 out of the first 7 matches in IPL 2021. Overall, the MS Dhoni-led franchise has taken part in 13 IPL seasons where they have won 111 out of 187 matches. CSK has won as many as three IPL titles.

In 2015, CSK was carved out of India Cements, which is the shareholder, trustee of the IPL franchise. It happened after match-fixing scandal during the same year that led to CSK’s ban for the next two IPL seasons (in 2016-17). The franchise made its strong comeback in 2018 where they went on to clinch their last silverware in the IPL.

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